Another Frightening Development for Short Sellers of Netflix Stock

Tough as nails short sellers have paid a dear price for betting against the streaming sensation. Netflix (NASDAQ: NFLX) stock is up more than 135% year to date.

Will the rally end soon? Not likely, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova in the following video. Weakness at Hulu, one of the company's chief rivals, suggests that Netflix's competitive advantages are more durable than the bears believe.

Reuters reports that former News Corp. (NASDAQ: FOXA) President Peter Chernin has bid just $500 million for Hulu, which helped to create in 2007. Walt Disney (NYSE: DIS) and News Corp. control Hulu as of this writing. Comcast also has a non-voting ownership interest.

At the very least, Tim says, the bid suggests Hulu's content relationships are losing value even as Netflix and Amazon.com (NASDAQ: AMZN) grow their respective streaming catalogs. Amazon, in particular, now claims to offer more than 38,000 movies and TV episodes via its Instant Video service. The e-tailer has also followed Netflix into the business of creating original series.

Which streaming supplier would you bet on now? Please watch to get Tim's full take, and then leave a comment to let us know whether you'd buy, sell, or short Netflix stock at current prices.

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Why can't the Hulu struggles simply mean paying extraordinary amounts of money for content that you disseminate for a little amount if money is simply not a sound business model. I think a lot of future chasers want to believe the future is now and are giving companies like NFLX and AMZN a huge break and a chance to "change the world" on the hopes they turn a dime one day. Every other company tries to make money now and the streaming content industry just doesn't make Billions now. And it won't until the cable companies figure out how they'll make it.

I'm a future chaser. But then again, every single person who invests in any company's stock is a future chaser. Each investor is paying cash NOW for the promise of FUTURE cash (appropriately discounted).

Anyone who is a "past chaser" - as opposed to a future chaser - is someone facing extinction. Holding on tight to the past is a loser's game. Things change. Always. And today things change fast - like content delivery.

Holding onto the past model of content delivery like the cable companies is like betting on the dinosaurs surviving... things change... always.

So if things do change, and I don't want to invest in cable companies since they will go extinct - who do I invest with? Who are the up-and-coming companies showing us new ways to deliver physical goods as well as digital content? Hmmm. NFLX and AMZN are the two best-run companies with the most visionary leaders who consistently grow customers, continuously experiment, learn from mistakes, and invest hugely into the company.

Both companies are making tremendous $$ from the apparently "little amount if money", but are re-investing most of that back into new technologies to keep building their business.